This exam has 15 questions. Each is worth 7 points. It is printed on Blue paper.
Finance 3000 Test One
BLUE SPECIAL CODE
September 18, 2007
33333333
1
Find the approximate value of the following bond: $1,000 par value;
semiannual
payments; annual
coupon rate of 5 percent; 20 year maturity; yield to maturity of 6 percent.
1)
$1,723.44
2)
$1,000.00
3)
$901.76
4)
$884.43
5)
None of the above
P/Y = 2
N = 40
I/Y = 6
PV = ???????
PMT = .05 * 1,000
½ each
payment (2 times a year) = 25
FV = 1,000
2
You have just graduated with $35,000 of student loans. The terms of the loans call for monthly
repayment over ten years. The interest rate is 6 percent. What is the amount of your monthly
payment?
1)
$386.64
2)
$388.57
3)
$404.98
4)
$1,081.15
5)
None of the above
P/Y = 12
N = 12 pmts a yr for 10 yrs = 120
I/Y=6
PV = 35,000
PMT = ???
FV = Pay off balance, so FV = 0
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This exam has 15 questions. Each is worth 7 points. It is printed on Blue paper.
3
You have signed up for a “balloon mortgage”. The terms are that the bank will give you $125,000
today and you will make monthly payments (based on 30year amortization 5 percent APR) for the
next 60 months. End of month payments. At the end of 5 years, you refinance the mortgage, paying
off the balance on the original mortgage. What will be the amount due on the original loan? Round
your answer to the nearest dollar.
1)
$8,131
2)
$10,214
3)
$114,603
4)
$114,786
5)
None of the above
P/Y = 12
N = 360 (monthly – 3*12)
I/Y = 5
PV = 125,000
PMT = 671.03
FV = 0
P1 = 1
P2 = 5
th
year would be 60
th
pmt
4
You buy a 6 percent coupon, 20 year maturity bond with
annual
interest payments when the yield
tomaturity is 5 percent.
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 Spring '08
 Staff
 Finance, Time Value Of Money, Debt, Interest, Blue paper

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